Correlation Between Crane and Standex International

Can any of the company-specific risk be diversified away by investing in both Crane and Standex International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Crane and Standex International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crane Company and Standex International, you can compare the effects of market volatilities on Crane and Standex International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Crane with a short position of Standex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crane and Standex International.

Diversification Opportunities for Crane and Standex International

0.43

Correlation Coefficient

Crane  Standex International

Very weak diversification

The 3 months correlation between Crane and Standex is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Crane Company and Standex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standex International and Crane is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Crane Company are associated (or correlated) with Standex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standex International has no effect on the direction of Crane i.e., Crane and Standex International go up and down completely randomly.

Pair Corralation between Crane and Standex International

Allowing for the 90-day total investment horizon Crane Company is expected to generate 1.4 times more return on investment than Standex International. However, Crane is 1.4 times more volatile than Standex International. It trades about 0.02 of its potential returns per unit of risk. Standex International is currently generating about -0.11 per unit of risk. If you would invest  15,372  in Crane Company on December 27, 2024 and sell it today you would earn a total of  219.00  from holding Crane Company or generate 1.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Crane Company  vs.  Standex International

Crane Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Crane is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Standex International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standex International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Crane and Standex International

The main advantage of trading using opposite Crane and Standex International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crane position performs unexpectedly, Standex International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Standex International will offset losses from the drop in Standex International's long position.

The idea behind Crane Company and Standex International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.